BlockFi Looks to Recoup $680M Lost in FTX Collapse
BlockFi reportedly will try to collect $680 million from Alameda Research.
The bankrupt cryptocurrency lender told a federal judge that Alameda, the bankrupt trading operation that is a sister company of FTX, defaulted on collateralized loans, Bloomberg reported Tuesday (Nov. 29).
During its first appearance in bankruptcy court, BlockFi said it will collect money it is owed by other crypto firms while it tries to reorganize or find a buyer to repay the more than $1 billion that it owes creditors. Alameda is one of those firms, according to the report.
At the same time, BlockFi owes FTX $275 million that was included in a lending package meant to help BlockFi weather a drop in crypto prices, the report said.
In the Tuesday hearing, U.S. Bankruptcy Judge Michael Kaplan gave BlockFi permission to keep paying employees and other necessary expenses, let it keep the names of many of its top creditors secret and said he will give the Justice Department’s U.S. Trustee an opportunity to argue in favor of making those creditors’ names public, per the report.
This news comes on the same day that the Financial Times reported that BlockFi has sued FTX founder Sam Bankman-Fried to recover shares in trading firm Robinhood.
According to the suit, BlockFi is seeking unnamed collateral from Emergent Fidelity Technologies, a company owned by Bankman-Fried. The Tuesday report by the Financial Times said the collateral in question is Bankman-Fried's stake in Robinhood.
BlockFi and eight affiliated debtors filed for Chapter 11 bankruptcy protection on Monday (Nov. 28), becoming the latest casualty of the multibillion-dollar collapse of FTX.
In a news release announcing the bankruptcy, BlockFi said it will focus on recovering all obligations owed to it, including those owed by FTX. Because of FTX’s own ongoing bankruptcy, BlockFi said it “expects that recoveries from FTX will be delayed.”
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